What Happened
- The Union Cabinet approved amendments to the Insolvency and Bankruptcy Code (IBC), 2016 and the Companies Act, 2013, following recommendations of a Lok Sabha Select Committee.
- The IBC (Amendment) Bill was originally introduced in Lok Sabha in August 2025; it was referred to a Select Committee headed by MP Brij Lal Panda, which submitted its report in December 2025.
- The Cabinet-approved amendments streamline the CIRP (Corporate Insolvency Resolution Process) admission timeline, introduce a new Creditor-Initiated Insolvency Resolution Process (CIIRP), enable group and cross-border insolvency proceedings, and clarify the priority of government tax claims.
- Finance Minister Nirmala Sitharaman had indicated the government planned to introduce the amended IBC legislation during the Budget session of Parliament.
- The Companies Act amendments propose to expand CSR (Corporate Social Responsibility) obligations to a broader set of companies, with revised lower financial thresholds for applicability.
Static Topic Bridges
Parliamentary Select Committee — Role in Legislation
A Select Committee of Parliament is formed to examine a specific bill in detail before it is passed. Unlike a Standing Committee (which has jurisdiction over a ministry and scrutinises all its bills), a Select Committee is constituted ad hoc for one bill. The committee holds hearings with experts, ministries, and stakeholders, and submits a report with clause-by-clause recommendations.
- Constitutional basis: Article 105 (powers, privileges of Parliament) and the Rules of Procedure of each House; the Houses can refer a bill to a Select Committee or a Joint Parliamentary Committee (JPC) before passage
- Select Committee vs Joint Committee: A Select Committee is constituted by one House; a Joint Parliamentary Committee (JPC) has members from both Lok Sabha and Rajya Sabha
- Pre-legislative scrutiny: Parliament's rules enable the Presiding Officer or the House to refer bills to parliamentary committees; this strengthens legislative quality
- IBC Amendment Bill: Referred to Lok Sabha Select Committee (chaired by Brij Lal Panda) after August 2025 introduction; report submitted December 2025
- Procedure after committee report: Cabinet approves amendments incorporating committee suggestions → revised bill introduced → debate and passage
Connection to this news: The Cabinet approval is the executive step following the legislature's pre-scrutiny by the Select Committee — a standard legislative pipeline for complex economic legislation where parliamentary expertise review is built in before final enactment.
Insolvency and Bankruptcy Code — Key Institutions and Their Roles
The IBC ecosystem rests on a set of specifically designed institutions that collaborate to process insolvency cases:
- IBBI (Insolvency and Bankruptcy Board of India): Regulates Insolvency Professionals (IPs), Insolvency Professional Entities (IPEs), and Information Utilities (IUs); established under Section 188 of IBC; quasi-judicial and regulatory body
- NCLT (National Company Law Tribunal): Adjudicating authority under IBC for corporate entities; established under Companies Act 2013 (Section 408); replaced Company Law Board and Board for Industrial and Financial Reconstruction (BIFR)
- NCLAT (National Company Law Appellate Tribunal): Appellate authority; hears appeals from NCLT orders; Section 61 of IBC
- DRT (Debt Recovery Tribunal): Adjudicating authority under IBC for individuals and partnership firms; established under RDDBFI Act 1993
- Resolution Professional (RP): Runs the CIRP; takes management control from existing promoters; appointed by CoC; regulated by IBBI
- Committee of Creditors (CoC): Financial creditors committee that votes on resolution plans; 66% majority for approval; operational creditors have representation but no voting rights
Connection to this news: The amendments (CIIRP, group insolvency, government claim priority) all work through these existing institutions — CIIRP operates outside NCLT initially but feeds back into it; group insolvency provisions enable a common NCLT bench; the government claim priority clarification directly affects CoC decision-making on resolution plans.
Corporate Insolvency Resolution — Empirical Performance and Reform Rationale
The IBC was designed to replace India's pre-2016 insolvency system, which was characterized by decade-long delays and low recovery rates. Since its enactment, IBC has resolved hundreds of large cases but has also revealed structural gaps.
- Pre-IBC: BIFR under SICA 1985 averaged 5-7 years for resolution; recovery rate was less than 26 cents on the dollar
- Post-IBC (2016-2024): CIRP average resolution time has increased beyond the statutory 330 days in practice due to litigation; IBBI reports average CIRP duration of approximately 600-800 days (including appeals)
- Cases admitted vs resolved: Of ~7,000 cases admitted to CIRP cumulatively, approximately 900 have been resolved, ~2,000 ended in liquidation, and the rest are ongoing
- Recovery rate improvement: Creditors recover approximately 30-32% of admitted claims under IBC resolutions (vs ~26% pre-IBC) — improvement but still below global benchmarks (US ~80%)
- World Bank Ease of Doing Business: India's "Resolving Insolvency" rank improved from 136th (2016) to 52nd (2020) after IBC enactment
- Total value resolved through IBC since 2016: Rs 3+ lakh crore of stressed assets
Connection to this news: The amendment package — particularly CIIRP's 150-day out-of-court option and the group insolvency framework — directly targets the average CIRP duration problem and the inability to handle interconnected corporate group failures efficiently.
Key Facts & Data
- IBC enacted: 2016; administered by Ministry of Corporate Affairs
- IBC Amendment Bill introduced in Lok Sabha: August 2025
- Select Committee report submitted: December 2025
- CIIRP: 150 days (+ 45 extension); 51% financial creditor consent; debtor-in-possession
- CIRP statutory maximum: 330 days; actual average (with litigation): ~600-800 days
- IBC cases admitted (cumulative to 2024): ~7,000; resolved: ~900; liquidation: ~2,000
- Recovery rate under IBC: ~30-32% of admitted claims
- World Bank Resolving Insolvency rank (2020): 52nd (up from 136th in 2016)
- Companies Act, 2013: Section 135 — CSR; Section 408 — NCLT constitution
- Revised CSR threshold (proposed 2025 amendment): Net profit ≥ Rs 3 crore (down from Rs 5 crore)
- NCLT replaced: BIFR (under SICA 1985) and Company Law Board